Which of the following would increase the portfolio beta?
A) Selling stocks with low unsystematic risk and buying stocks with high unsystematic risk
B) Selling Treasury Bills in the portfolio and buying stocks with low systematic risk
C) Selling stocks with high systematic risk and buying stocks with low systematic risk
D) Shifting new funds to the portfolio and buying stocks with low systematic risk

Question

Quizplus · Accepted Answer

Selling Treasury Bills (which have a beta of zero) and buying stocks, even those with low systematic risk, would increase the overall portfolio beta because stocks generally have a higher beta than Treasury Bills.

Which of the Following Would Increase the Portfolio Beta